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2 years ago

A U.S. firm holds an asset in Great Britain and faces the following scenario:

Business

1 answer:

Lady_Fox [76]2 years ago

3 0

Answer:

C) Sell Â£2,278.13 forward at the 1-year forward rate, F1($/Â£), that prevails at time zero.

Explanation:

given data

State 1 State 2 State 3

Probability 25% 50% 25%

Spot rate $ 2.50 /Â£ $ 2.00 /Â£ $ 1.60 /Â£

P* Â£ 1,800 Â£ 2,250 Â£ 2,812.50

P $4,500 $4,500 $4,500

solution

company holds portfolio in pound. so to get hedge, they will sell that of the same amount.

we get here average value of the portfolio that is

The average value of the portfolio = £ (0.25*1800 + 0.5*2250 + 0.25*2812.5)

The average value of the portfolio = 2278.13

so correct option is C) Sell Â£2,278.13 forward at the 1-year forward rate, F1($/Â£), that prevails at time zero.

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Answer: Encouraging new bicycling enthusisasts

Explanation:

From the question, we are informed that Aaron has designed innovative accessories for hard-core bicycling enthusiasts and the he knows where and how he will make them,and he needs to turn his attention to the getting the products to the customers.

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2 years ago

Read 2 more answers

Demand for a product is 12,000 units per year. Every time an order is made, the company must pay $15.00 per order. The cost t

KATRIN_1 [288]

Answer:

Total cost is $24060

Explanation:

Total demand per year = 12000 units

Size of one order = 3000 units

Total number of orders = 12000 / 3000 = 4

Per order cost = $15

Per unit cost = $2

Below is the calculation to find the total cost.

Total cost = Number of orders × Per order cost + Total demand per year × Per unit cost

Now insert the values.

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2 years ago

David Spear invested $14,000 today in a fund that earns 10% compounded annually. Click here to view factor tables To what amount

docker41 [41]

Answer:

The investment will grow to $20,497 in four years if interest is compounded annually.

On other hand, the investment will grow to $20,684 if interest is compounded at 10% semi-annually

Explanation:

Using compound interest formula below the,the total investment after four years:

A=P(1+r/n)^nt

A=Future value

P=Principal amount invested

n=number of time interest is paid per time period

t=number of time period

First question:

P=$14000

r=10%

n=4 years

t=1 period

A=$14000*(1+0.1)^4

A=$20497.4

Second question

P=$14000

r=10%

n=4years

t=2 times

A=$14000*(1+0.1/2)^4*2

A=$20684.38

In short , the investment grows better if the interest is compounded at 10% semi-annually.

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2 years ago

A company has a factory that is designed so that it is most efficient (average unit cost is minimized) when producing 18,300 uni

PtichkaEL [24]

Answer: 14.9%

Explanation:

18300/12770x100%

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